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A.T. CROSS COMPANY REPORTS FOURTH QUARTER RESULTS
Net Sales Increase 16.4%
Continued Progress on Restructuring
Lincoln, RI – February 18, 2004 – A.T. Cross Company
(AMEX: ATX), today announced financial results for the fourth quarter
and full year ended January 3, 2004.
Fourth Quarter Results
Net sales climbed 16.4% to $38.7 million from $33.3 million in the fourth quarter
of 2002. On a constant dollar basis, consolidated net sales rose 11.0%. Global writing
instrument and accessory revenue rose 9.0% to $36.3 million compared to $33.3 million
in the same period last year. Costa Del Mar contributed $2.4 million in net sales
for the quarter.
Gross margin increased 150 basis points to 55.9% of net sales from 54.4% of net
sales in the year-ago period. This improvement was primarily driven by leverage
from the revenue increase in addition to favorable product mix during the quarter
and various cost savings initiatives.
Selling, general and administrative expenses were $16.6 million, or 42.9% of net
sales, versus $14.2 million, or 42.6% of net sales last year, primarily due to greater
marketing support, the integration of Costa Del Mar and the unfavorable impact of
foreign exchange rates.
As part of its previously announced restructuring plan, the company recorded a fourth
quarter pre-tax restructuring charge of $0.8 million primarily for severance and
related costs associated with the global reorganization efforts.
On a reported basis, net income was $2.1 million, or $0.14 per share, versus $3.4
million, or $0.21 per share, last year. On a comparable basis, which excludes non-recurring
items in both periods, net income increased 39.3% to $2.5 million, or $0.17 per
share, compared to $1.8 million, or $0.11 per share, in the fourth quarter of 2002.
Please see the schedule accompanying this release for the full reconciliation of
GAAP to comparable basis (non-GAAP) net income and earnings per share.
David G. Whalen, President and Chief Executive Officer of A.T. Cross Company, stated,
“There were several reasons for our strong performance in the fourth quarter.Net
sales increased in each of our geographic regions, particularly Asia, where we benefited
from both the economic recovery as well as our re-branding efforts. Also, the compelling
holiday programs that we secured with our United States national accounts improved
the presentation in this key channel and led to increased sales.
“In addition, we introduced Vice, an innovative quality writing instrument, to coincide
with the holiday selling season. This successful launch generated added excitement
about the Cross holiday gift offering. Along with a recovery in the overall economic
environment, these key drivers resulted in solid fourth quarter performance.”
Full Year Results
Net sales increased 6.8% to $125.3 million from $117.3 million in 2002. On a constant
dollar basis, consolidated net sales rose 2.8%. The increase was due to an $8.8
million contribution from Costa Del Mar that was partially offset by a 0.7% decline
in writing instrument and accessory revenue.
For the full year 2003, the company recorded a pre-tax restructuring charge of $2.4
million primarily for severance and related costs associated with the previously
announced global reorganization efforts.
On a reported basis, net income was $1.8 million, or $0.12 per share, compared to
$4.9 million, or $0.31 per share. On a comparable basis, which excludes non-recurring
items in both periods, net income was $2.8 million, or $0.19 per share, versus $3.4
million, or $0.21 per share. Please see the schedule accompanying this release for
the full reconciliation of GAAP to comparable basis (non-GAAP) net income and earnings
per share.
2004 Outlook
The Company currently anticipates that 2004 revenue for the writing instrument and
accessories segment will grow in the low-to-mid single digit range. Consolidated
annual revenue, which will incorporate a full year of Costa Del Mar sales, is expected
to increase in the mid-to-high single digit range.
In accordance with the Company’s previously announced restructuring plan, it is
expected that pre-tax restructuring charges of approximately $2.6 million will be
recorded largely in the first half of 2004.
Including the restructuring costs, the Company currently expects improvement in
reported profitability for 2004.
Mr. Whalen concluded, “During 2003, we made progress on our strategic goals and
we expect this momentum to carry into 2004. We are looking forward to the launch
of our next innovative quality writing instrument, the Verve, in March. In addition,
the preparations for our holiday national account programs are already underway
as we look to build upon the success we achieved in these accounts in 2003. Finally,
our corporate reorganization program is progressing on schedule and we look forward
to these initiatives providing a more efficient operating structure that will allow
us to focus on building our portfolio of market-leading branded accessories.”
The Company’s management will host a conference call tomorrow, February 19, 2004,
at 9:00 a.m. Eastern Time. A live webcast of the call will be accessible
here. The webcast will be archived for 30 days on the site, while a telephone
replay of the call will be available beginning at 11:00 a.m. Eastern Time on February
19th through February 26th at 1-402-220-2325 or 1-888-274-8332.
Non-GAAP Measures
This release contains comparable basis (non-GAAP) measures of net income and earnings
per share that are provided as a complement to results provided in accordance with
generally accepted accounting principles. These non-GAAP results are among the indicators
management uses as a basis for evaluating financial performance as well as for forecasting
future periods. For these reasons, management believes these non-GAAP measures can
be useful to investors, potential investors and others. The presentation of this
additional information is not meant to be considered in isolation or as a substitute
for net income or earnings per share prepared in accordance with GAAP.
About A.T. Cross Company
Building on the rich tradition of its award-winning writing instruments and reputation
for innovation and craftsmanship, A.T. Cross Company is a designer and marketer
of branded personal and business accessories. Cross provides a range of distinctive
products that appeal to a growing market of consumers seeking to enhance their image
and facilitate their lifestyle. Cross products, including award-winning quality
writing instruments, timepieces, business accessories and Costa Del Mar sunglasses,
are distributed in retail and corporate gift channels worldwide.
Statements contained in this release that are not historical facts are forward-looking
statements made pursuant to the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995 (including statements relating to the expected external
economic recovery, the anticipated effect of the launch of new writing instrument
products, in particular, Verve, the anticipated performance of Costa Del Mar, the
anticipated success of holiday programs with office superstores, and the anticipated
financial and operational benefits from restructuring). In addition, words such
as "believes," "anticipates," "expects," and similar
expressions are intended to identify forward-looking statements. These forward-looking
statements are subject to risks and uncertainties, including but not limited to
the ability to continue to successfully integrate and operate a new business; the
ability to launch new products successfully, consumers’ reaction to the Company’s
existing and new writing instrument products, consumer reaction to the Company’s
ability to transfer its brand beyond writing instruments, and the inability of the
Company to impact the overall economic environment and are not guarantees since
there are inherent difficulties in predicting future results. Actual results could
differ materially from those expressed or implied in the forward-looking statements.
The information contained in this document is as of February 18, 2004. The Company
assumes no obligation to update any forward-looking statements contained in this
document as a result of new information or future events or developments. Additional
discussion of factors that could cause actual results to differ materially from
management's expectations is contained in the Company's filings under the Securities
Exchange Act of 1934.
CONTACTS:
John T. Ruggieri
Senior Vice President and
Chief Financial Officer
401-335-8470
Investor Relations:
Financial Dynamics
Cara O’Brien/Melissa Myron/Lila Sharifian
212-850-5600
Download a spreadsheet
with 2003 Fourth Quarter Results
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